g. SAP's U.K. business experienced double-digit growth in the quarters following the Brexit vote, and its oil and gas-related business had its strongest quarter when the oil price fell below $30 per barrel in 2016.
Ericsson is their top telecom equipment pick for the move into 5G, with rivals Huawei and ZTE effectively phased out by U.S. scrutiny of the Chinese companies. Only 5% of smartphones are 5G, Credit Suisse points out. In semiconductors, they highlight ASML (ASML.AE) and Taiwan Semiconductor Manufacturing (2330.TW) for their "natural monopolies," as well as Samsung Electronics . Credit Suisse also is positive on China internet/tech names, even with the tough U.S. rules, highlighting Tencent and Alibaba (9988.HK).
The strategists are neutral on Apple (AAPL), as the Credit Suisse team points out the size of Apple's addressable market are those making at least $12,000 a year, amounting to a market cap of $1,680 per head for those 1.25 billion people. That requires $560 in spending per person, which "appears ambitious, even if 15%-20% of Apple's revenue are corporate customers."
Credit Suisse also struggles to justify Tesla's (TSLA) market cap representing 64% of the rest of the global automobile sector. But neither Google owner Alphabet (GOOGL) nor Facebook (FB) looks expensive on earnings relative to the market, and both look attractive when comparing their free cash flow yield to the 10-year Treasury .
The buzz
Friday is when key futures and options markets contracts expire -- so-called quad witching -- which can inject volatility into markets.
The University of Michigan's consumer sentiment index for September is the key economic release. The latest reading of the New York Federal Reserve's weekly economic index declined to a reading of -5.11%, which is considerably better than the worst level of -11.45% in late April, but off the peak of -4.81% in late August. St. Louis Fed President James Bullard is due to discuss the recovery from the coronavirus pandemic.
The Federal Reserve late on Thursday said it may extend limits on bank stock buybacks and dividends into the fourth quarter.
The Committee on Foreign Investment in the U.S. has asked gaming companies to provide information about their data- security protocols involving China's Tencent Holdings , Bloomberg News reported, citing people familiar with the matter. Tencent is an investor in Activision Blizzard (ATVI), among its many gaming links.
Ericsson (ERIC-B.SK) said it is buying U.S. -based company Cradlepoint for $1.1 billion to boost its 5G offerings for enterprise customers.
The market After a 130-point decline for the Dow Jones Industrial Average on Thursday, U.S. stock futures edged higher.
European travel stocks, including British Airways owner International Airlines Group and easyJet , were hit hard on Friday amid growing concern about rising infections in Europe . U.K. health minister Matt Hancock told Sky News the U.K. government wasn't ruling out a second lockdown, as the World Health Organization warned of a "very serious situation" in Europe .
The chart
Are markets getting too excited by the U.S. elections? Derivatives analysts at BNP Paribas point out the options market is pricing in a much more volatile stock market move than normal. They also note that open interest in calls on the VIX stock market volatility index are close to five-year lows. "This makes it less likely that VIX will have an explosive move higher going forward, in our view," they say.
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